Canadian pipeline and energy company Enbridge has secured a deal with the UK-based energy giant BP to construct and operate crude oil and natural gas pipelines for the oil major’s recently sanctioned deepwater development in the U.S. Gulf of Mexico. The pipeline system duo is expected to be operational by 2029.
According to Enbridge, this agreement, valued at approximately $700 million, for crude oil and natural gas pipelines at the Kaskida project in the Gulf of Mexico, solidifies its role in the U.S. Gulf’s offshore pipeline infrastructure.
The Canyon oil pipeline system will combine 24″ and 26″ pipes with a 200,000 barrels per day capacity, transporting crude from the Keathley Canyon area to the Shell pipeline company-operated Green Canyon 19 platform, targeting the Louisiana market.
Meanwhile, the Canyon gas pipeline will feature a 12″ pipeline capable of handling 125 million cubic feet per day, connecting with Enbridge’s existing Magnolia gas gathering pipeline and the Garden Banks gas pipeline.
Both pipelines will be integrated into BP’s long-term plans, including options to link future Paleogene production to the newly developed infrastructure. Detailed design and procurement are set to begin in 2025.
“We are extremely pleased to extend an existing relationship with bp and support their new deepwater development. This opportunity diversifies our Gulf of Mexico offshore business, strengthens our significant natural gas pipeline portfolio, and enhances our ability to meet the strategic needs of our customers,” said Cynthia Hansen , EVP & President of Gas Transmission and Midstream.
“The Canyon Oil and Gas pipelines offer an attractive opportunity for Enbridge to serve customers in the Gulf of Mexico and further expand our U.S. Gulf Coast footprint. The agreements generate stable and predictable cash flow and provide future growth opportunities.”
Located in the Keathley Canyon area about 250 miles southwest off the coast of New Orleans, Kaskida is said to be in a prime location, with a stable fiscal regime and market access. This will also be BP’s first development in the Gulf of Mexico to produce from reservoirs requiring well equipment with a pressure rating of up to 20,000 pounds per square inch (20K).
BP made a final investment decision (FID) in July to develop its sixth-operated project in the U.S. Gulf of Mexico, targeting a high-margin basin with the potential to bring 10 billion barrels of discovered resources online. The FID for the Kaskida project marked BP’s commitment to building its sixth hub in the Gulf of Mexico.
The project includes a new floating production unit (FPU), designed to produce 80,000 barrels of crude oil daily from six wells in its initial phase.